Travelzoo Reports First Quarter 2014 Results Business Wire NEW YORK -- April 17, 2014 Travelzoo Inc. (NASDAQ:TZOO): First Quarter 2014 Financial Highlights: *Revenue of $40.2 million, down 5% year-over-year *Operating profit of $7.0 million, down 13% year-over-year *Net income of $4.6 million *Earnings per share of $0.31, compared to $0.36 in the prior-year period Travelzoo Inc., a global Internet media company, today announced financial results for the first quarter ended March31, 2014, with revenue of $40.2 million, a decrease of 5% year-over-year. Operating profit was $7.0 million, down 13% year-over-year. Net income was $4.6 million, with diluted earnings per share of $0.31, down from $0.36 in the prior-year period. "Our European business delivered strong results. North America reported weak revenue. North America was impacted by a reduction in Search marketing spend and slow Local voucher sales," said Chris Loughlin, chief executive officer. "A positive highlight is the record number of mobile downloads we saw in the quarter. We believe in our strategy of quickly adapting to mobile usage." North America North America business segment revenue decreased 12% year-over-year to $26.4 million. Operating profit for the first quarter was $4.6 million, or 17% of revenue, down from $5.5 million, or 18% of revenue, in the prior-year period. Europe Europe business segment revenue increased 13% year-over-year to $13.8 million. In local currency terms, revenue increased 6% year-over-year. Operating profit for the first quarter was $2.4 million, or 17% of revenue, down from $2.6 million, or 21% of revenue in the prior-year period. Subscribers Travelzoo had a total unduplicated number of subscribers in North America and Europe of 23.6 million as of March31, 2014, up 1% from December31, 2013. In North America, total unduplicated number of subscribers was 16.7 million as of March31, 2014, up 1% from December31, 2013. In Europe, total unduplicated number of subscribers was 6.9 million as of March31, 2014, up 2% from December31, 2013. Update on Hotel Booking Platform Travelzoo launched the first phase of its hotel booking platform at the end of March. A select group of U.S. subscribers can now book hotels any night of the year through Travelzoo. "We are working with many new hotels that previously were unable to accept the Local voucher format," said Chris Loughlin, chief executive officer. "The new platform also makes it easier for our subscribers to book a hotel deal on their mobile phones." The hotel booking platform is expected to begin contributing to revenues in the second quarter, an average of 60 to 70 days after bookings occur. Travelzoo recognizes revenueupon the hotel stay and not at the time of booking. Income Taxes Income tax expense was $2.5 million, compared to $2.5 million in the prior-year period. The effective income tax rate was 35%, up from 31% in the prior-year period. Asset Management During the first quarter of 2014, Travelzoo generated $1.8 million of cash from operating activities. Accounts receivable increased by $52,000 over the prior-year period to $15.4 million. Accounts payable increased by $2.1 million over the prior-year period to $29.0 million. Capital expenditures were $1.0 million, up from $900,000 in the prior-year period. As of March31, 2014, cash and cash equivalents were $61.0 million. Conference Call Travelzoo will host a conference call to discuss first quarter results at 11:00 a.m. ET today. Please visit http://www.travelzoo.com/earnings to *download the management presentation (PDF format) to be discussed in the conference call; *access the webcast. About Travelzoo Travelzoo Inc. is a global Internet media company. With more than 27million subscribers in North America, Europe, and Asia Pacific and 25 offices worldwide, Travelzoo® publishes deals from more than 2,000 travel and entertainment companies. Travelzoo’s deal experts review offers to find the best deals and confirm their true value. In Asia Pacific, Travelzoo is independently owned and operated by Travelzoo (Asia) Ltd. and Travelzoo Japan K.K. under a license agreement with Travelzoo Inc. Certain statements contained in this press release that are not historical facts may be forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities and Exchange Act of 1934. These forward-looking statements may include, but are not limited to, statements about our plans, objectives, expectations, prospects and intentions, markets in which we participate and other statements contained in this press release that are not historical facts. When used in this press release, the words “expect”, “predict”, “project”, “anticipate”, “believe”, “estimate”, “intend”, “plan”, “seek” and similar expressions are generally intended to identify forward-looking statements. Because these forward-looking statements involve risks and uncertainties, there are important factors that could cause actual results to differ materially from those expressed or implied by these forward-looking statements, including changes in our plans, objectives, expectations, prospects and intentions and other factors discussed in our filings with the SEC. We cannot guarantee any future levels of activity, performance or achievements. Travelzoo undertakes no obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this press release. Travelzoo and Top 20 are registered trademarks of Travelzoo. All other names are trademarks and/or registered trademarks of their respective owners. Travelzoo Inc. Condensed Consolidated Statements of Operations (Unaudited) (In thousands, except per share amounts) Three months ended March 31, 2014 2013 Revenues $ 40,195 $ 42,177 Cost of revenues 4,777 3,985 Gross profit 35,418 38,192 Operating expenses: Sales and marketing 17,843 19,659 General and administrative 10,578 10,497 Total operating expenses 28,421 30,156 Income from operations 6,997 8,036 Other income 122 31 Income before income taxes 7,119 8,067 Income taxes 2,481 2,472 Net income $ 4,638 $ 5,595 Net income per share: Basic $ 0.31 $ 0.36 Diluted $ 0.31 $ 0.36 Weighted average shares: Basic 14,880 15,362 Diluted 14,970 15,371 Travelzoo Inc. Condensed Consolidated Balance Sheets (Unaudited) (In thousands) March 31, December 31, 2014 2013 Assets Current assets: Cash and cash equivalents $ 61,035 $ 66,223 Accounts receivable, net 15,355 13,986 Income taxes receivable 1,388 2,656 Deposits 251 396 Prepaid expenses and other current 2,538 3,202 assets Deferred tax assets 1,067 1,143 Restricted cash — 200 Funds held for reverse/forward stock 212 13,668 split Total current assets 81,846 101,474 Deposits, less current portion 1,231 1,168 Deferred tax assets, less current 2,032 2,032 portion Restricted cash 1,480 1,479 Property and equipment, net 10,305 8,245 Intangible assets, net 349 404 Total assets $ 97,243 $ 114,802 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 28,999 $ 31,766 Accrued expenses 9,820 10,543 Deferred revenue 1,688 1,578 Deferred rent 271 281 Income tax payable 726 — Reserve for unexchanged promotional 11,500 12,726 shares Payable to shareholders for 212 13,668 reverse/forward stock split Total current liabilities 53,216 70,562 Long-term tax liabilities 10,546 10,436 Deferred rent, less current portion 3,111 2,469 Total liabilities 66,873 83,467 Common stock 163 163 Treasury stock (21,231 ) (15,662 ) Additional paid-in capital 10,642 10,247 Accumulated other comprehensive loss (613 ) (530 ) Retained earnings 41,409 37,117 Total stockholders’ equity 30,370 31,335 Total liabilities and stockholders’ $ 97,243 $ 114,802 equity Travelzoo Inc. Condensed Consolidated Statements of Cash Flows (Unaudited) (In thousands) Three months ended March 31, 2014 2013 Cash flows from operating activities: Net income $ 4,638 $ 5,595 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 701 716 Deferred income taxes 76 193 Stock-based compensation 395 307 Provision for losses on accounts receivable (52 ) 95 Net foreign currency effects (9 ) 94 Changes in operating assets and liabilities: Accounts receivable (1,288 ) (2,036 ) Deposits 133 (155 ) Income tax receivable 1,266 1,564 Prepaid expenses and other current assets 447 350 Accounts payable (2,984 ) (549 ) Accrued expenses (1,294 ) 850 Deferred revenue 110 (517 ) Deferred rent 5 (110 ) Income tax payable 722 — Reserve for unexchanged promotional shares (1,226 ) — Other non-current liabilities 111 103 Net cash provided by operating activities 1,751 6,500 Cash flows from investing activities: Release of restricted cash 200 — Purchases of property and equipment (1,019 ) (900 ) Net cash used in investing activities (819 ) (900 ) Cash flows from financing activities: Repurchase of common stock (5,569 ) — Reverse/forward stock split, including (479 ) — transaction costs Net cash used in financing activities (6,048 ) — Effect of exchange rate on cash and cash (72 ) (1,662 ) equivalents Net increase (decrease) in cash and cash (5,188 ) 3,938 equivalents Cash and cash equivalents at beginning of 66,223 61,169 period Cash and cash equivalents at end of period $ 61,035 $ 65,107 Supplemental disclosure of cash flow information: Cash paid for income taxes, net $ 335 $ 10 Travelzoo Inc. Segment Information (Unaudited) (In thousands) Three months North Elimination ended March Europe and Other Consolidated 31, 2014 America Revenue from unaffiliated $ 26,353 $ 13,842 $ — $ 40,195 customers Intersegment 221 12 (233) — revenue Total net 26,574 13,854 (233) 40,195 revenues Operating $ 4,604 $ 2,393 $ — $ 6,997 income Three months North Elimination ended March Europe and Other Consolidated 31, 2013 America Revenue from unaffiliated $ 29,911 $ 12,266 $ — $ 42,177 customers Intersegment 262 108 (370) — revenue Total net 30,173 12,374 (370) 42,177 revenues Operating $ 5,484 $ 2,552 $ — $ 8,036 income Contact: Media: Travelzoo Inc. Glen Ceremony, +1-212-484-4998 Chief Financial Officer firstname.lastname@example.org
Travelzoo Reports First Quarter 2014 Results
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